History: Government revenue and expenditure in kenya part 1

Public finance

-Refers to revenue and expenditure of national and county governmetn

Reasons why the government of kenya is decentralizing financial powers to county government

-To increase access to resources

Reasons why the government of kenya is decentralizing financial powers to county government

-Increase public participation in governance

Reasons why the government of kenya is decentralizing financial powers to county government

-To empower citizens to demand for accountability and performance

Principles of public finance

-Openness and accountability in financial matters

Principles of public finance

-Promotion of equity by sharing in a fair manner the burden of taxation

Principles of public finance

-Special provision to cater for marginalized people and areas

Principles of public finance

-Ensuring the benefits of the resources and public borrowing is shared equally between the present and future generation

National budget

-Is a comprehensive statement that gives an estimate of public revenue, expenditure and financial plans for a given financial year for a government which begins on 1st June and ends 30th July

National and county government annual budgets shall contain

-Estimates of revenue and expenditure

National and county government annual budgets shall contain

-Details of how deficit will be financed

National and county government annual budgets shall contain

-Proposals affecting borrowing that will increase public debt during the following year

Reasons for preparation of national budget in kenya

-The budget helps the government to prioritize it's needs giving concentration to the most urgent ones

Reasons for preparation of national budget in kenya

-The budget enables the government to identify sources of government revenue to meet their financial obligations

Reasons for preparation of national budget in kenya

-It helps the government to identify development projects to finance the coming financial year

Reasons for preparation of national budget in kenya

-The budget gives MPs an opportunity to discuss the government expenditure before it is put in use. They may approve necessary changes

Reasons for preparation of national budget in kenya

-The budget helps the government to balance it's revenue and expenditure needs

Reasons for preparation of national budget in kenya

-The budget helps the government to plan for certain needs that emerges in the course of the year e.g. disease outbreak

Public revenue

-This is the money raised by national government for the financial year

Equalization fund

-A half of the revenue collected by national government is poured into this fund

Equalization fund

-Equalization fund will be used by the government to provide basic services such as water, roads, electricity and health facilities

Consolidated fund

-All money received by national government is paid to this fund

Consolidated fund

-Money in this account is only withdrawn after the approval of the controller of national budget

Contingencies fund

-Money paid to this account is meant for emergencies

Revenue fund

-All money raised by the county government is paid to this fund except money excluded by the act of parliament

Main source of government revenue in kenya

-Domestic revenue sources/internal source

Main source of government revenue in kenya

-External revenue sources

Domestic revenue sources

-Indirect tax

Domestic revenue sources

-Direct tax

Domestic revenue sources

-Domestic borrowing

Domestic revenue sources

-Fees e.g. tourism fees, loan interests and court fines

Direct tax

-It's the money charged directly on goods and services

Income tax

-This is the tax paid by people employed by the government and private sector(PAYE)

Custom duties

-It's the tax imposed on imported and exported goods

Excise duties

-The tax charged on goods produced locally and sold within the country

Domestic borrowing

-The government borrows money from parastatals like Kenya airways and central bank

Bilateral aids

-This is where two friendly nations assist each other

Multilateral aids

-This involves assistance from blocks of nations or global institutions like world bank, european union etc.

Grants

-This is non payable money given to the country by a foreign nation

Problems of domestic revenue

-Many individuals and companies avoid paying taxes

Problems of domestic revenue

-In wealth declaration, people and companies give wrong information hence reducing amount of tax paid

Problems of domestic revenue

-In some cases, officers who collect revenue end up embezzling the revenue

Problems of domestic revenue

-Many rich individual keep their money in foreign nations instead of investing in kenya

Problems of domestic revenue

-People lack information on how they can invest with the government through treasury bills

Problems of external sources of revenue

-Donor's conditions must be fulfilled before funds are released. In the recent past, the recipient nations were forced to privatize their parastatals

Problems of external sources of revenue

-Loans are issued at high interest rates which make servicing them a burden

Problems of external sources of revenue

-Government debts have increased making it difficult to pay thus attracting heavy penalties

Problems of external sources of revenue

-Foreign aids came with conditions which benefit the donor's country than the receiving country

Capital expenditure

-This is the money set aside for new development projects such as development of roads and airports

Recurrent expenditure

-This is the money used by the government to sustain and maintain existing facilities and services